The Contemporary World

SOCS103

Midterm Exam

Instructions:

1. Answer each question using double space, font size 12, Times New Roman

2. Limit your answers to each item to a minimum of 35 sentences and a maximum of 60

sentences.

3. Do not attempt to “copy paste” answers from your classmates. Students with “copy paste”

answers will be given a failing grade.

4. Use proper citation to avoid plagiarism.

Questions:

1. Give your own definition of globalization and explain your definition. Distinguish

interdependence, interconnectedness, and integration from one another. Why are experiences of

globalization uneven? Why is there a need to study globalization and the contemporary world in

general?

● Globalization is the process of worldwide spread of technology, science, enterprises, and

services via transportation, communication, and trade. Simply put, globalization is the

acknowledgement that we are becoming increasingly reliant and connected on a global

scale. It affects our ideas, cultures, and economic trade. This implies that we will and

should progressively regard ourselves as members of a single global society and a single

species, the human race.

● Interdependence entails being collectively contingent. It refers to two or more countries

that have an impact on and are reliant on one another. Interconnectedness, on the other

hand, is the state of having several elements linked or connected together. It also refers to

the capability to comprehend and perform in a growingly heterogeneous, multinational,

yet interrelated world. Integration means being comprised and united to make a whole. It

is a process in which the quality of relationships among autonomous social units

deteriorates to the point where each unit's autonomy is eroded and it becomes a

component of a bigger mass.

● The significance of understanding globalization and the modern world in general allows

us to understand the economic atmosphere in which we live. It makes us realize that

national economies are pittance compared to the global economy. It also makes us aware

that the economy is larger than a single country, and that capital and products travel

across borders. Having knowledge about these allows us to discover new opportunities.

Globalization and the modern world are indeed important to understand because they are

all around us, from economics to finance, culture to science, environmental changes to

geopolitical conflicts, and so on. It entails growing into a network in which everyone is

related to everyone else and humankind is deeply ingrained in the natural world. The

most important aspect of this developmental stage is the total interconnection of people,

nations, and the entire system. And this necessitates the development of selfless,

altruistically complementary collaboration in place of the prior selfish, viciously, purely

competitive behavior.
2. What are the significant institutions and their respective roles that facilitate trading? What is

protectionism and why are countries ultimately forced to adopt trade liberalization instead? Why

does liberal trade policy still fail to aid fairer trading to all countries? How has the role of trading

help shape the course of globalization?

● The expansion of international trade can be boosted if countries adhere to a common set

of import and export laws, regulations, and standards. Various international economic

institutions set these common rules and regulations. These organizations seek to level the

playing field for all countries and promote economic cooperation. Such institutions are as

follows:

1. The World Bank- The World Bank is a multilateral financial institution supported by 184

member countries. Its mission is to provide loans and grants to developing countries in

order to alleviate poverty and promote economic progress. To understand the growth

experiences of different nations and estimate the consequences of policies in those

countries, economists at the World Bank employ variants of the growth model described

in this chapter.1

2. World Trade Organization- The World Trade Organization (WTO) was established in

1995 to replace the General Agreement on Tariffs and Trade (GATT), which had been in

place since 1948. Because GATT was biased in favor of wealthy countries, it was

replaced by WTO. The World Trade Body (WTO) was established as a global

1https://saylordotorg.github.io/text_macroeconomics-theory-through-applications/s10-05-the-role-of-
international-inst.html
 international organization to regulate international trade rules. WTO's major goal is to

assist international organizations in conducting their operations.2

3. International Monetary Fund- The IMF was founded in 1945 and now has 187 member

countries. It seeks to promote financial stability, global monetary cooperation,

international trade facilitation, poverty reduction, and long-term economic prosperity

around the world. Its headquarters are in the United States, in Washington, D.C.3

4. United Nations Conference on Trade and Development- UNCTAD is the main organ of

the United Nations General Assembly, having been created in 1964. It provides a

platform for developing countries to debate issues concerning economic development.

UNCTAD has 193 member countries and is based in Geneva, Switzerland. UNCTAD

was established because previous institutions such as the GATT, the IMF, and the World

Bank were not concerned with developing country issues. The fundamental goal of

UNCTAD is to develop policies in sectors of development such as trade, finance,

transportation, and technology.4

● Protectionism is essentially the use of whatever tools are available to safeguard the

economy. However, while this is sometimes done to discourage competition, there are

certain good reasons for doing so. Protectionism is almost the polar opposite of trade

liberalization. On the other hand, in a free trade agreement, both parties agree to

eliminate all tariffs on their respective goods. This provides consumers with more options

at lower prices. The most compelling argument in favor of trade liberalization is that the
2https://www.economicsdiscussion.net/international-economics/4-major-international-economic-
institutions/4249
3https://www.sciencedirect.com/topics/economics-econometrics-and-finance/international-economic-
organization
4https://www.economicsdiscussion.net/international-economics/4-major-international-economic-
institutions/4249
 country's economy requires foreign competition to improve its chevalier. It is also

assumed that the convoluted administrative control over commerce adds to the growth of

corruption in government and the business sector.

● The role of trading help shape the course of globalization because trade is central to

ending global poverty. Countries that are open to international commerce tend to grow

quicker, innovate, increase productivity, and give their citizens with greater income and

opportunity. Lower-income households benefit from open trade because goods and

services are more inexpensive. Integrating into the global economy through commerce

and global value chains contributes to local and global economic growth and poverty

reduction.